This seminal article and others written by Kahneman in the field of behavioral economics lead to him winning the Nobel Prize in economics in 1992. Researchers and psychologists Daniel Kahneman and Amos Tversky, in their experiments with students and faculty at the University of Stockholm and the University of Michigan and with Israeli subjects, concluded that "… a person who has not made peace with his losses is likely to accept gambles that would be unacceptable to him otherwise." Their findings, which were published in the March 1979 issue of Econometrica as " Prospect Theory: An Analysis of Decision Under Risk," reaffirmed "the well-known observation that the tendency to bet on long shots increases in the course of the betting day." Gapper wrote, "To know what goes on in the mind of a Nick Leeson or a Jérôme Kerviel - and that of every reckless gambler - it helps to be a bird-watcher." The sparrows, after having been deprived of food for four hours, would fly directly to a feed dish that only sometimes had an abundance of food, versus a dish that always had two seeds. Gapper explained that this "loss aversion" behavior was also observed among yellow-eyed junco birds during an experiment.
2, 2011, FT Magazine article, " What makes a rogue trader?" these traders - when faced with financial losses - would gamble additional losses if there was a chance to bring in big money.
What do rogue traders Nick Leeson (Barings Bank), Kewku Adobli (UBS AG) and Jérôme Kerviel (Société Générale) have in common with sparrows? According to the conclusions of Financial Times chief business commentator John Gapper in his Dec.